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The Sunshine National Bank currently has a negative gap of $200 million, which management finds excessive. What would be a way for a bank to
The Sunshine National Bank currently has a negative gap of $200 million, which management finds excessive. What would be a way for a bank to reduce this gap?
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Issue a fixed rate bond and use the proceeds to issue variable-interest rate loans.
Borrow funds in the repo market and use the proceeds to issue fixed rate loans.
Borrow short-term funds from the central bank and use the proceeds to buy T-bonds.
All of these are good ways to reduce the bank's gap.
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